Below is a part of a company's forecasted income statement for the fiscal year of 2023-2024....
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Below is a part of a company's forecasted income statement for the fiscal year of 2023-2024. All figures are in thousands of dollars. The company has 5 million common shares outstanding. The company needs to raise $3 million to finance a project and the company has two financing options: Borrow money from a bank and pay 7% interest each year; Or issue 0.5 million common stocks for $6 per share. Based on the given information and answer the following questions. Earnings before Interest & Taxes (EBIT) Interest Earnings before Taxes Taxes @ 35% Net Income $5,898 762 5,136 1798 3,338 a) Calculate the company's earnings per share for each of the financing options. b) Determine the break-even EBIT between the two financing projected EBIT in 2023 - 2004 is $3,500,000, is it beneficial to increase leverage? ns. If the company's Below is a part of a company's forecasted income statement for the fiscal year of 2023-2024. All figures are in thousands of dollars. The company has 5 million common shares outstanding. The company needs to raise $3 million to finance a project and the company has two financing options: Borrow money from a bank and pay 7% interest each year; Or issue 0.5 million common stocks for $6 per share. Based on the given information and answer the following questions. Earnings before Interest & Taxes (EBIT) Interest Earnings before Taxes Taxes @ 35% Net Income $5,898 762 5,136 1798 3,338 a) Calculate the company's earnings per share for each of the financing options. b) Determine the break-even EBIT between the two financing projected EBIT in 2023 - 2004 is $3,500,000, is it beneficial to increase leverage? ns. If the company's
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a To calculate the companys earnings per share EPS for each financing option we need to determine th... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1119371403
4th edition
Authors: Robert Parrino, David S. Kidwell, Thomas Bates
Posted Date:
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